INVESTOR PRESENTATION August 2017
PRESENTERS & CONTACTS Murray Wright President & CEO 410.229.1597 wright@tessco.com Aric Spitulnik SVP, Chief Financial Officer 410.229.1419 spitulnik@tessco.com Cindy King VP, Investor Relations Officer, Customer Transactions and Treasurer 410.229.1161 kingc@tessco.com 2
FORWARD-LOOKING STATEMENTS Certain statements made by us during this presentation are forward-looking statements within the meaning of federal securities laws. TESSCO s actual results may differ materially from those discussed in any forward-looking statement. Additional information concerning factors that may cause such a difference can be found in TESSCO s public disclosure, including TESSCO s most recent report on Form 10-K, as well as prior and subsequently filed reports. 3
Setting the pace as a value-added distributor to the wireless world. 4
POSITIONED FOR SUCCESS EXPANDING OPPORTUNITIES WIRELESS KNOWLEDGE OPERATIONAL EXPERTISE STRONG FINANCIAL HEALTH Forefront of new technologies and innovation Compelling offer and value proposition Extensive customer base Great inventory position and service levels Extensive expertise in sales, marketing, product management, and solutions development Strong balance sheet Compelling dividend yield Scalable operating leverage 5
TESSCO: THE VITAL LINK HUNDREDS OF MANUFACTURER PARTNERS THOUSANDS OF CUSTOMERS VALUE ADD Public Network Operators Private System Operators VARs Design engineers Solution architects Technical expertise Program management Finance and Credit Solutions Site kitting Ventev Supply Chain Services Services TL 9000 certified Operational Excellence Government Retail 6 Value-Added Services Support Higher Margins
7 TESSCO S WIRELESS WORLD
TESSCO FACTS 1982 TESSCO founded 772 Team members* 6.02% Dividend yield** $544.5M Revenue (LTM) $0.17 EPS (LTM) $7.2M Adj. EBITDA (LTM) Certified business $110.5M Market Cap** 8 Note: LTM represents the twelve months ended 6/25/2017. * As of 6/25/2017 ** As of 8/9/2017
GROWTH OPPORTUNITIES IN WIRELESS Traditional market Wireless Infrastructure North American LTE Infrastructure Spending Bandwidth explosion $5.0 billion $8.2 billion Proliferation of wireless devices and applications LTE build out and deployment of spectrum Small cells DAS and in-building 2015 2019 Source: Gartner, September 2015 9
GROWTH OPPORTUNITIES IN WIRELESS Emerging markets Wi-Fi IoT/M2M Public Wi-Fi Hotspot Deployment Cellular M2M Connections 5.7 million 13.3 million 2014 2020 Bandwidth offloading Subscriber experience Public hotspots Wi-Fi/Mobile handover (Project FI) Source: ABI Research, March 2015 224 million 539 million 2014 2019 Remote monitoring and control Wireless backhaul Asset protection Source: Ovum, November 2015 10
INTERNET OF THINGS & WI-FI
CONNECTED DEVICES 2020 7.6 BILLION 50 BILLION 6.58 2015 7.2 BILLION 25 BILLION 3.47 2010 6.8 BILLION 12.5 BILLION 1.84 2003 6.3 BILLION 500 MILLION 0.08 World Population Connected Devices Connected Devices (Per Person) 12 Source: Cisco IBSG
CASE STUDY Agtech - Smart Agriculture CUSTOMER NEED Produce more high value crops with less water, land and energy SOLUTION Weather station to detect ambient conditions including temperature, soil moisture, sunlight, humidity, rainfall, wind speed/direction Intelligent meters provide water delivery analytics and make recommendations based on weather conditions OUTCOME Improved yield Saved cost on pumping water Received tax advantages due to water conservation 13
CASE STUDY Providing Seamless Wi-Fi Coverage and Capacity throughout Fleets of Cruise Ships. CUSTOMER NEED Complete Wi-Fi coverage for travelers and employees on cruise ships with difficult RF environments, corrosive conditions, a high density of users, and a need for seamless aesthetics. SOLUTION Ventev high density antennas for the large concentration of passengers. Polycarbonate enclosures protect equipment from corrosive salt air and blend with the ships exteriors. Fully integrated enclosures with patch antennas allow quick installation and are paintable to match décor. OUTCOME Enhanced connectivity and traveler experience aboard ships. High performance wireless Point-of-Sale Poolside Service improved customer service and revenue opportunities. 14
DESIGNED & MANUFACTURED PROPRIETARY PRODUCTS 15% of total revenue 48% WIRELESS INFRASTRUCTURE Products to deploy, protect, power and improve the performance of Wi-Fi, DAS and LTE networks. 52% MOBILE ACCESSORIES Accessories and components to support wireless mobile and portable device performance Site Hardware Cable Mounts Antennas Grounding Enclosures Chargers Headsets Styluses Cases & protection Power hubs 16
RECENT PRODUCT LAUNCHES WIRELESS INFRASTRUCTURE MOBILE ACCESSORIES I-Beam Industrial Mount Chargesync alloy micro cables Co-Location Mount USB Charginghub 400 SIMPLE RELIABLE PROFESSIONAL USE INNOVATIVE AWARD WINNING 17
DRIVERS FOR GROWTH Optimized go to market strategy focused on increasing market share with strategic customers and winning new customers Regionalization of sales force increasing time spent with customers New business generation commission programs that strongly incentivizes portfolio growth Improved product and vendor management engagement Investment in ecommerce tools, improving customer and vendor interactions while enhancing productivity 18
KEY TAKEAWAYS ON THE MARK Vital link between wireless manufacturers and customers Well positioned to participate in high-growth wireless opportunities Compelling offer & value proposition Extensive technical and operational expertise Executing plan to accelerate revenue growth High margin Ventev Strong balance sheet Scalable operating leverage Compelling dividend yield Expect growth in revenue and earnings in FY18 19
FINANCIAL RESULTS
TESSCO HISTORICAL REVENUE IN MILLIONS $450 $482 $539 $560 $550 $531 $533 $371 Revenue without major 3PL Transitioned major 3PL Total revenue FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 $151M $155M $251M $214M NA NA NA NA $522M $605M $733M $753M $560M $550M $531M $533M 21
THE MARKETS WE SERVE Carriers Program Managers Contractors Tower Owners WISPs Utilities Oil & Gas Transportation Mining Enterprise State & Local Federal GVARs Education Public Network Organizations 19% Private System Operators 15% Govt. 6% Value Added Resellers 25% Retail Stores 35% Carriers Stores Independent Carrier Agents Retailers etailers 22 Two-Way Dealers Network VARs
HISTORICAL REVENUE: PUBLIC CARRIERS VS. ALL OTHERS $408,176 $427,945 $410,892 $422,193 $441,511 $451,280 $362,990 $307,192 $63,808 $87,010 $73,824 $111,146 $149,195 $127,426 $89,171 $82,015 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Public Carriers All Other 23
Base Station Infrastructure PRODUCT GROUPS Mobile Devices & Accessories Network Systems Installation, Test & Maintenance 42% of total revenue 36% of total revenue 17% of total revenue 5% of total revenue Base station antennas Cable and transmission lines Small towers Lightning protection devices Connectors Power Systems Enclosures Grounding Jumpers Miscellaneous hardware Mobile antennas Replacement batteries Cases Screen protectors Speakers Mobile amplifiers Power supplies Bluetooth and corded headsets Mounts Car antennas Music accessories Data and memory cards Fixed and mobile broadband radio equipment Wireless networking filtering systems Distributed antenna systems Two-way radiods Security and surveillance products Soophisticated analysis equipment Various frequency-, voltage- and power-measuring devices Tools Hardware GPS Safety Replacement and component parts 24
25 OVER 400 LEADING WIRELESS BRANDS
HISTORICAL RESULTS 22.2% Core Gross Margin* 22.6% 3.7% 3.9% Operating Margin * 4.7% 21.7% 21.4% 21.1% 21.0% 2.6% 1.7% 0.5% FY12 FY13 FY14 FY15 FY16 FY17 FY12 FY13 FY14 FY15 FY16 FY17 Adjusted EBITDA * EPS * $34.7 $26.7 $33.4 $20.7 $16.0 $7.2 $2.03 $2.15 $1.94 $1.04 $0.65 $0.17 FY12 FY13 FY14 FY15 FY16 FY17 FY12 FY13 FY14 FY15 FY16 FY17 26 * Includes impact of major 3PL that ended at the end of FY13
STRONG BALANCE SHEET $35 million credit facility Generated $2.4 million in cash from operations in FY17 Minimal CAPEX $0.20 per share quarterly dividend ($ in millions) Assets 3/26/2017 6/25/2017 Cash and equivalents $8.5 $0.2 Accounts receivable 64.8 79.8 Inventory 64.0 72.1 Property & equipment 13.8 13.5 Goodwill 11.7 11.7 Other 11.2 12.1 Total assets $174.0 $189.4 Liabilities Accounts payable $53.6 $63.1 Revolving line of credit 0.0 8.3 Accrued expenses & other liabilities 12.4 10.7 Total liabilities $66.0 $82.1 Equity Equity $108.0 $107.3 Total liabilities & equity $174.0 $189.4 27
INVESTMENT HIGHLIGHTS Extensive technical and operational expertise Compelling offer and value proposition Executing plan to accelerate revenue growth Scalable operating leverage Strong balance sheet Compelling dividend yield 28
EMPOWERING OUR CUSTOMERS TO REACH THEIR FULL POTENTIAL IN AN INCREASINGLY CONNECTED WORLD 29
30